Unit 2

Question 1

What is growth?

Answer 1

The increase in the size and status of a business

Question 2

Why do businesses want to grow?

Answer 2

Reasons: Increase market share, maximise profits, Economies of scale, Increase notability

Question 3

What is the difference and What are the +,- of a Merger and a Takeover

Answer 3

A merger is when two or more businesses combine often under a different name
A Takeover is when a business absorbs another taking its brand and products

Merger
\+ More ideas
\+ Increased market share
- Disagreements
- Split profits
Takeover
\+ Any successful brands/products are now yours
\+ Faster growth/ Reduced competition 
-Expensive
- Bad image

Question 4

What are the +,- of Inorganic and organic growth?

Answer 4

Organic
\+ Reflects success
\+ Save money 
-harder/slower growth
-Less ideas that would’ve been gained otherwise 
Inorganic
\+ faster growth
\+Reduce competition 
- Expensive
- Can create a bad image

Question 5

What are the 4 types of integration?

Answer 5

Horizontal Growth - buying a similar business

Backwards vertical - buying a business in which the supplies originate

Forwards vertical - buying property of other businesses

Diversification - buying an unrelated business

Question 6

How is franchising a good method of growth?

Answer 6

+ Franchisee’s do all the work
+you get a % of profits made /Royalties
+ increases brand recognition
+ place business on the global market

Question 7

How are stakeholders affected by growth

Answer 7

Owners- increased earnings
Workers- possible increased hours/workload
Customers- more options of where to shop
Consumers- possible better quality

Question 8

What is a Plc and what is an Ltd

Answer 8

Plc- Public limited Company- shares open to everyone
Ltd- Private limited company- shareholders have to be invited

Both have limited liability

Question 9

What are the +,- of Plc’s and ltd’s?

Answer 9

Plc:
\+ shares are open to everyone 
\+ faster growth
- Expensive 
- risk of takeover
Ltd
\+ pick shareholders 
\+ increased capital
- slower way to grow 
- loss of profits

Question 10

Explain the process of floatation

Answer 10

Flotation is the process of changing a private company into a public company by issuing shares and soliciting the public to purchase them.

Question 11

Define aims and objectives

Answer 11

Aims: A realistic target a business sets to achieve in a year
Objectives: Things to do in order to achieve the aims

Question 12

Why do businesses have aims and objectives?

Answer 12

Businesses set aims & objectives to increase motivation and productivity within the business.

Question 13

Typical aims& objectives of a business

Answer 13

Break even
Survival 
Grow
Increase market share 
Increase profit margins